Privacy Evolved

The curtain falls on the notion of privacy

The net curtain. After decades of keeping prying eyes out of suburban
living rooms, the simple net curtain can tell us a thing or two about
privacy. Cast your mind back to the start of this century:

2001

Terrorist attacks on the World
Trade Center lead to the birth of the Patriot
Act.

2003

Myspace launches, becomes one of the
most popular social media sites ever, and paves the way
for Facebook et al.

2004

Sales of net curtains go into
decline, dropping 4% in the next 3
years.1

What is the Internet of Things?

Coincidence? Perhaps. But the birth of internet based social networks
and the rise of governmental anti-terrorism activity post 9/11 have
helped to create a climate where data collection is well-funded,
commercialised, and commonly accepted.2

In an era where big data is using algorithms to piece together
nuggets of data to reveal an individual’s identity, are concepts of
privacy and consent outdated?3

Are digital systems eroding the simple notion that there can be
anonymity in a crowd?4

Every day, hundreds of pieces of information about you are recorded
and stored on a networked device. Data about your health, your
activity, your buying preferences, finances and more, are all
available to interested parties who care to look for them.

In some instances, you were unaware that the data was being
collected, but in most instances, you freely offered up the
information in return for discounts, rewards or social inclusion. This
tradeoff between security, convenience and privacy is changing
traditional perceptions of what privacy means.5

For many, these changes are unsettling and carry inherent risk, but
for those too young to remember the heyday of the net curtain, private
life may already be an illusion. They’ve grown up in a world where
they are surveilled, their employer owns their emails and the
government listens to their phone calls… and yet their desire to
connect and maintain relationships online mean they’re happy to make
this compromise.

What will the future look like if, as some predict, social
conformity continues to be a regressive force on privacy? What
sacrifices will we need to make, what concessions, and what
opportunities will be created for those willing to capitalize on this
new world of abundant data?

What lies behind the curtain? The answer remains as intriguing as ever.

Where public ends and private begins

The evolution of privacy is inseparably combined with the type and
quantity of data we’re divulging to the online community. So, let’s
start with some basic numbers to put things in context:

That means nearly half of the world’s population sharing information
about themselves online: Today, Facebook alone has around 2 billion
users6, a number that is likely to be dwarfed in a future
where even greater numbers of the world’s population will have
internet access.7

And we like to share.8

Adult internet users claim to have posted the following online.

Among younger users who have grown up free of the traditional ideas
of privacy, these numbers are likely to be much higher.

Now, add to this picture the increasing presence of Artificial
Intelligence in our homes, our cars and our wearable technology. The
‘Internet of Things’ is creating a future where the lines between our
on and offline lives are blurred beyond any meaningful recognition.

As Homero Gil de Zuniga, Director of Digital Media Research at the
University of Texas-Austin stated;

“By 2025, many of the issues, behaviors and information we consider
to be private today will not be so. Information will be even more
pervasive, even more liquid and portable. The digital private sphere
and the digital public sphere will most likely, completely overlap”.9

While some people will predictably rebel against this development,
evidence suggests that our perception of privacy will shift and a new
balance between public security and private information will be found.10

Faced with the prospect of turning our backs on the social inclusion
and conveniences of modern life that our online lives afford, or
re-evaluating our privacy standards, most will choose the
latter.11 Indeed, most already do.

accept that disclosure of personal
information is a ‘fact of modern life’.

aged 25 – 34 view their personal
information as a commodity to be traded.12

A report by the PEW Research Centre found that people are happy to
accept surprising incursions into their privacy in return for
relatively minor benefits:

54% would accept CCTV with facial recognition in their
workplace if it helped to catch a petty thief

52% would be
happy for their health information to be recorded on a third-party
website if it helped the booking process for visits to their
doctor

47% would allow their supermarket to SELL data on
their shopping habits and preferences in return for
discounts13

It is hard to imagine a scenario whereby this trend could be
reversed, or even slowed. A series of well publicised stories relating
to the way our personal information is collected, used, and secured,
have done little to dissuade people from continuing to publish and
share their personal information:

Snowden – 1.7m documents14

Equifax – 143m
records15

Spambot – 700m records16

It seems that a willingness to divulge personal information is
simply now just a fact of life17, that we prefer
convenience to confidentiality, security to secrecy.

"The choice for mankind lies between freedom and happiness, and for the great bulk of mankind, happiness is better."

George Orwell

The evolving face of privacy and our relationship with it has the
potential to completely revolutionize business. The risks are real but
so too are the opportunities. Businesses operating in this new era
will succeed, or fail, on two key pillars:

Their ability to build trust with clients through robust data
protection processes

The commitment to upskilling staff to
enable them to identify opportunities in the abundance of data
they’ll have access to

Data protection

Preventing and responding to identity crime in Australia in 2016 cost
$2.6 billion. Around 5% of Australians experience financial loss as a
result of one of these crimes, while nearly 10% experienced misuse
with relation to their personal data.18

Due to their prevalence for sharing personal data online, the number
one target for these types of crime are people aged
18-24.19 This social media generation, including some 2
billion or so using Facebook, may be largely oblivious to why their
favorite social media platforms are free. But this is changing as
people become more aware of the realities of how their personal data
is being shared, collected and commoditized.

As these figures continue to grow annually, and the primary targets
mature to business owning age, the issue of data protection will
become increasingly prominent.

There is no international consensus among internet providers on how
to best balance personal privacy and security with the convenience of
popular content and services. Until there is, risks, hacks and
opportunities for theft are going to continue to exist.

This places a great emphasis on accountants, bookkeepers, and other
professional services who represent the visible guardians of personal
data, to take the issue seriously and position themselves as experts
in the protection of their clients’ data.

New business will increasingly base their decision on professional
service providers on their ability to demonstrate:

Admin security – Access to data that aligns with an
individual’s role.

Employee training and education – To ensure that employees
understand how data is protected, why and what their roles and
responsibilities are in that protection21.

Those unable to sufficiently demonstrate an end to end security and
privacy approach to client data, and their own, may well find
themselves falling victim to both attack and market forces.

But the subject of data security and its subsequent privacy
concerns, is not without its opportunities.

In a world where the range of ways to collect
data about us becomes ubiquitous, living a private life as we
currently understand it may be beyond the reach of most people.22

That is not to say it won’t exist, but the notion of privacy itself
may become commoditized.

Improvements to encryption technology are likely to result in the
creation of boutique services for people willing to pay a premium for
greater control over their data. Services that the accounting
profession will be well placed to provide. Privacy services may become
a luxury service, one with which the wealthy can navigate the new
normal of public life and mass surveillance.

Big data is getting bigger – and so are the opportunities

Google processes more than 24 petabytes a day – a thousand times the
data contained within the US Library of Congress.

Each month there are 32 billion searches on Twitter and 1 billion
unique visitors to YouTube. By 2020 there will be 5,200 gigabytes of
data available for every man, woman and child on the planet.

Key to the continued growth of data volume over the next 10 years is
the ‘internet of things’, connecting objects to the internet and
allowing information to pass between them. By 2020 30 billion devices
will connect wirelessly to the internet transferring information about
every aspect of our lives.23

But is all this data good for us?

At its heart, big data works by creating connections between
previously unrelated pieces of data in order to bring to light the
previously unseen. A great, if somewhat extreme example is the
Canadian Credit Card issuer who discovered that people who used their
card in a particular pool hall had a 47% chance of missing 4 or more
repayments in the subsequent 12 months. Whereas, people who purchased
anti-scuff pads for the legs of their furniture almost never missed a payment.24

This obviously raises substantial privacy concerns about how our
personal data can or should be used. The US government even issued a
statement warning against this type of use for data analytics:

“data analytics have the potential to eclipse longstanding civil
rights protections in how personal information is used in housing,
credit, employment, health, education, and the marketplace. Americans’
relationship with data should expand, not diminish, their
opportunities and potential.”25

The reality however is that big data equals big business. Now we
have embarked on the road of sacrificing our privacy, it is unlikely
that attempts to develop public policy to ensure security and privacy
online will resist the counter efforts of those special interest
groups who stand to benefit from its use.26

So assuming big data is only set to get bigger and ride over our
personal privacy, how will it likely effect the accounting industry?

The number one fear most people have is for the future of their jobs.

Big data, and hence big analytics, has
already automated some basic and entry level tasks, and there is
every reason to believe it will continue to automate more and more
complex ones.

This represents a big change to the way firms will do business and
some jobs and tasks will be made obsolete through its implementation.
But whether big data represents a threat or an opportunity to the
accounting profession is up to accountants and their willingness to upskill.

There is an opportunity for accountants to take a more strategic
role and help shape the future of the industry. Those willing to
upskill will move up the value chain and turn big data to their
advantage. Business intelligence and data mining tools will improve
efficiency, help to spot new opportunities, provide customers with
better products and services, and predict future patterns of behaviour.

However, without the right tools, experience and knowledge to
interpret the data, its abundance is irrelevant and it is relegated to
lines on a spreadsheet. Understanding the data and drawing insights
from it is going to be key to future success in the industry.
Accountants have the advantage of understanding business, and they are
already accustomed to working with structured datasets and performing
data analysis. They must learn to take a lead role in the
decision-making process27

The problem for accountants is that the future belongs to
unstructured data — the kind that can be dug out of tweets, videos,
photographs and the vast amounts of text floating free on the
Internet. Properly trained to structure, gather and analyse financial
information, accountants and finance professionals can apply their
core skills to non-financial and other datasets – and, crucially, help
make big data smaller and more structured.28

The increase in the value they bring to organisations could,
therefore, be dramatic. There could, in the next 5 to 10 years, be a
qualitative change that sees the finance department develop from a
service function to a business-critical service, central to strategic
decision making.

The next stage in evolution

We are sharing more of ourselves online today than we would to most
people’s faces. Convenience and security have seen us too far along
the road of sacrificing our privacy to ever return to any traditional
notion of privacy we once had.

The next generation are likely to have no concept of what privacy
meant to those generations that preceded them. What we regard as
private today is unlikely to have much bearing in the future. A new
balance will need to be found between public security and private information.

Our evolving digital economy will necessitate a focus on trust,
privacy, transparency and security in the relationships between
accountants and their clients.

While it is to be expected that some people will rebel against the
idea of sharing more of themselves online, it may prove impossible to
live outside of the grid without the means to pay for it. New boutique
companies offering privacy as a commodity will appear. Businesses who
control who has access to data and offer the opportunity to escape our
new reality, for a price.

The impact of big data on automation and the
future of jobs is real. Increasingly complex tasks will become
automated and accountants will need to adapt in order to maximise
their skill set in a meaningful and valuable way.

That does not mean accountants will become obsolete though. Far from
it. Automation will provide the time to focus on more valuable
services to their clients. Using their business insights, their
experience, and their emotional connection to the wants and needs of
their clients, accountants will be perfectly placed to make sense of
the masses of data and turn it into strategically valuable insights.

In a future lacking in privacy, accountants may be the only people
that business owners can trust.